LaSalle LOGIPORT REIT : Financial Results (REIT) for the Fiscal Period Ended August 31, 2021

Financial Results (REIT) for the Fiscal Period Ended August 31, 2021

October 15, 2021

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:

LaSalle LOGIPORT REIT

Stock Exchange Listing: TSE

S e c u r i t i e s

C o d e :

3466

U R L : https://lasalle-logiport.com/english/

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: (Title)

Executive Director

(Name)

Toshimitsu Fujiwara

Asset Management Company:

LaSalle REIT Advisors K.K.

R e p r e s e n t a t i v e :

(Title)

President and CEO

(Name)

Toshimitsu Fujiwara

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(Title)

Head of Fund Management

(Name)

Taira Jigami

Telephone [phone]

Scheduled filing date of securities report:

November 29, 2021

Scheduled date of distribution payment commencement: November 18, 2021

Supplementary information for financial results: Yes

Briefing meeting for financial results: Yes

(for institutional investors and analysts)

(Amounts are rounded down to the nearest million yen)

1. Financial Results for the Fiscal Period Ended August 31, 2021 (March 1, 2021 to August 31, 2021)

(1) Management Status

(% figures show period-over-period change)

Operating revenues

Operating income

Ordinary income

Net income

Million yen

%

Million yen

%

Million yen

%

Million yen

%

Fiscal period ended August 31, 2021

Fiscal period ended February 28, 2021

Fiscal period ended August 31, 2021

Fiscal period ended February 28, 2021

1. Distributions

10,707	12.7	5,974	12.4	5,288	13.3
9,504	27.9	5,316	30.7	4,668	27.4
			Ratio of net income on		Ratio of ordinary
			unitholders' equity		income on total assets
Net income per unit		( ROE)			(ROA)
	Yen			%			%
	3,041			2.6			1.4
	2,852			2.8			1.5

5,287 13.3

4,667 27.4

Ratio of ordinary

income on operating

revenues

%

49.4

49.1

Distributions

Distributions

per unit

Total amount of

per unit

Total amount of

(excluding

distributions

Distributions in

Total amount of

(including those

distributions

those in excess

(excluding

excess of

distributions in

in excess of

(including those

of retained

those in excess

retained

excess of

retained

in excess of

earnings per

of retained

earnings per

retained

earnings per

retained

unit)

earnings)

unit

earnings

unit)

earnings )

Yen

Million yen

Yen

Million yen

Yen

Million yen

Fiscal period ended

2,962

5,287

231

412

3,193

5,699

August 31, 2021

Fiscal period ended

2,849

4,666

228

373

3,077

5,040

February 28, 2021

		Net assets
		distribution
Payout ratio		ratio
%		%

1. 2.5

1. 2.6

Note 1. Due to the issuance of new investment, the payout ratio in the fiscal period ended February 28, 2021 and August 31, 2021 were calculated according to the following formula, shown rounded to two decimal places.

Payout ratio = total amount of distributions (excluding those in excess of earnings per unit) ÷ net income × 100 Note 2. The net assets distribution ratio was calculated according to the following formula.

Distributions per unit (excluding those in excess of retained earnings per unit) / [(net assets per unit at the beginning of the fiscal period + net assets per unit at the end of the fiscal period) ÷ 2] × 100

Note 3. The total amount of distributions in excess of retained earnings was considered to be a refund of investment, which, for tax purposes, falls under a category of distribution as a reduction in unitholders' capital.

Note 4. The rates of reduction in retained earnings due to distributions in excess of retained earnings (a refund of investment categorized as a reduction in distribution from unitholders' capital for tax purposes) in the fiscal period ended February 28, 2021and August 31, 2021 were 0.002. Note that the calculation of the rates of reduction in retained earnings are based on Article 23, Paragraph 1, No. 4 of the Order for Enforcement of the Corporation Tax Act.

1. Financial Position

	Total assets		Net assets		Unitholders' equity ratio	Net assets per unit
Fiscal period ended	Million yen		Million yen	%		Yen
385,675	214,911	55.7		120,398
August 31, 2021
Fiscal period ended	345,529	190,874	55.2		116,528
February 28, 2021
(4) Cash Flows	Cash flows from		Cash flows from		Cash flows from	Cash and cash
	operating activities		investing activities		financing activities	equivalents at period end
Fiscal period ended	Million yen		Million yen		Million yen		Million yen
8,706	(39,709)	33,665		24,463
August 31, 2021
Fiscal period ended	7,741	(76,948)	77,016		21,800
February 28, 2021

2. Forecasts for the Fiscal Periods Ending February 28, 2022 (September 1, 2021 to February 28, 2022) and August 31, 2022 (March 1, 2022 to August 31, 2022)

(% figures show period-over-period change)

												Distributions			Distributions
												per unit	Distributions	per unit
												(excluding those	in excess of	(including those
												in excess of	retained	in excess of
												retained earnings	earnings per	retained earnings
	Operating revenues	Operating income	Ordinary income	Net income	per unit)	unit	per unit)
	Million yen	%	Million yen	%		Million yen	%		Million yen	%		Yen		Yen		Yen
Fiscal period ended	10,523	(1.7)	5,680	(4.9)		5,092	(3.7)		5,091	(3.7)		2,852		238		3,090
February 28, 2022
Fiscal period ended	10,587	0.6	5,622	(1.0)		5,024	(1.3)		5,023	(1.3)		2,814		241		3,055
August 31, 2022

Reference: Forecasted net income per unit for the period ending February 28, 2022: 2,852 yen ; forecasted net income per unit for the

period ending August 31, 2022: 2,814 yen

• Other
• 1. Changes in accounting policies, changes in accounting estimates and retrospective restatements

(i)	Changes in accounting policies due to revisions to accounting standards and other regulations	: None
(ii) Changes in accounting policies other than (i) above	: None
(iii) Changes in accounting estimates	: None
(iv)	Retrospective restatements	: None

1. Total number of investment units issued and outstanding

		Fiscal period ended		Fiscal period ended
(i)	Total number of investment units issued and outstanding	August 31, 2021		February 28, 2021
1,785,000 units		1,638,000 units
	(including treasury units) at the end of the fiscal period
(ii)	Number of treasury units at the end of the fiscal period	-	-

Note: Please see the "Notes to Per Unit Information" on page 29 for the number of investment units used as the basis for calculating net income per unit.

* Presentation of the status of implementation of audit procedures

At the time of the release of these financial results for the fiscal period, auditing procedures for financial statements pursuant to the Financial Instruments and Exchange Act have not been completed.

* Explanation of appropriate use of the forecast of financial results and other matters of special note

The forecasts and other forward-looking statements presented in this material are based on information currently available to LLR and certain assumptions LLR deems to be reasonable. Actual results may differ materially from these forecasts due to a variety of factors. In addition, these forecasts do not guarantee the above distribution amounts.

For further details about the assumptions used in the forecasts above, please refer to the "Forecast Assumptions for the Fiscal Periods Ending February 28, 2022 and August 31, 2022" stated on page 6 below.

END

【Table of Contents】

1. Management Policy and Management Status

(1)	Management Status …………………………………………………………………………………………………………	2
(2)	Investment Risks ……………………………………………………………………………………………………………	9

2. Financial Statements

1. Balance Sheet ……………………………………………………………………………………………………………… 10
2. Income Statement…………………………………………………………………………………………………………… 12
3. Statement of Unitholders' Equity…………………………………………………………………………………………… 13
4. Statements related to Distributions ………………………………………………………………………………………… 15
5. Statements of Cash Flows ………………………………………………………………………………………………… 17

(6) Notes with respect to Going Concern Assumptions ……………………………………………………………………… 18

1. Notes on Matters concerning Significant Accounting Policies …………………………………………………………… 18
2. Notes to the Financial Statements ………………………………………………………………………………………… 20
3. Changes in Number of Investment Units Issued and Outstanding ………………………………………………………… 30

3. Reference Information

1. Information on Price of the Managed Assets ……………………………………………………………………………… 32

(2) Capital Expenditures on Portfolio Assets ………………………………………………………………………………… 45

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1. Management Policy and Management Status

1. Management Status (Overview of the Fiscal Period)
2. 1. Significant developments of the investment corporation

With LaSalle REIT Advisors K.K. as the organizer, LaSalle LOGIPORT REIT (LLR) was established on October 9, 2015, pursuant to the Investment Trusts Act, and was listed on the J-REIT section of the Tokyo Stock Exchange (Securities Code: 3466) on February 17, 2016.

The financial statements for the fiscal period ended August 31, 2021 (11th fiscal period) were recently completed, and the total number of issued and outstanding investment units as of the end of this fiscal period is 1,785,000 units.

(ii) Investment Environment and Management Performance

In the current fiscal year, although there were some signs of recovery in consumer spending and exports accompanying the resumption of the economy, the Japanese economy remained uncertain due to the issuance of four emergency declarations. Demand, particularly in the face-to-face service industry, has been sluggish due to the spread of COVID-19 infections since the beginning of 2020. On the other hand, the e-commerce market, which is the driving force behind rental demand for advanced logistics facilities, has grown significantly. There is also a growing movement towards optimizing the supply network centered on consumer goods.

Demand in the leasing market for prime logistics facilities is expected to stay strong. There is a continuing trend toward consolidation and integration of older locations primarily by third-party logistics (3PL) operators, as well as new expansions and diversification of space usage. The further establishment of a nationwide logistics network is expected to also support the expansion of structural demand for prime logistics facilities. In this environment, although new supply remained at a record high level in the Tokyo metropolitan area logistics facility market, total demand expanded. As a result, the vacancy rate remained low and stable at the 1% level, and rents also maintained a moderate upward trend. Similarly, even in the Kinki region, which also recorded record-high levels of new supply, existing properties maintained high occupancy rates across the market. In the Osaka coastal region and inland areas, vacancy rates declined to around 2% and rents, which were viewed as stagnant, started to rise moderately with the support of strong pre-leasing activities.

In financial markets, global monetary easing led to lower overseas interest rates and historically strong stock prices. In the logistics real estate market, inflow of investments from funds that are oriented toward income returns in excess of bond investments (pension funds, insurance companies, etc.) continued against the backdrop of solid demand and the outlook for stable rental income. The annual transaction volume in the logistics real estate market reached a record high despite the intensifying competition to acquire land for development, rising real estate prices, and continuously shrinking transaction yields.

Under these conditions, LLR steadily managed its 19 properties (total acquisition price 357,829 million yen, leasable floor area 1,478,651 square-meters) and the overall weighted average portfolio occupancy rate through the fiscal period was in a strong position at 98.8%. LLR's portfolio has 169 tenants as of the end of this fiscal period ended August 31, 2021 and aims for further tenant diversification.

(iii) Overview of Procurement of Funds

LLR raised 22,656 million yen through a public offering with a payment date of April 27, 2021 and an additional 1,132 million yen through a third-party allotment with a payment date of May 25, 2021, respectively. The total amount of capital contribution (net) as of the end of the fiscal period under review was 209,623 million yen.

In the fiscal year, LLR borrowed a total of 19,700 million yen in April 2021 in order to finance the acquisition of Logiport Osaka Bay as well as to finance part of the deal related costs. Also, as a result of the payment of proceeds for the issuance of new investment units through a third-party allotment (payment date: May 25, 2021), the refund of consumption tax for the acquisition of properties (including payment of miscellaneous expenses) and the redemption of the principal of preferred equity shares from Nanko Property TMK, a total of 1.9 billion yen in interest-bearing debt was prepaid and partially prepaid on June 11, 2021. Also, a total of 2.8 billion yen in interest-bearing debt were prepaid and partially prepaid on July 1, 2021.

As far as the 11th fiscal period was concerned, at the end of the current fiscal period, the balance of interest-bearing debt of LLR was 161,320 million yen and LTV was 41.8%.

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The status of LLR's credit ratings assigned as of August 31, 2021 was as follows.

Credit Rating Agency		Rating Type		Rating		Rating Outlook
JCR		Long-term issuer rating		AA-		Positive
(Japan Credit Rating Agency Ltd.)		Bond Rating (Note)		AA-	-

Note: This was the rating for the 1st, 2nd, 3rd, 4th, 5th, 6th and 7th Unsecured Investment Corporation Bonds.

(iv) Overview of Business Performance and Distributions

The operating period for the current fiscal period was 184 days from March 1, 2021 to August 31, 2021. During current fiscal period, LLR generated operating revenues of 10,707 million yen, operating income of 5,974 million yen, ordinary income of 5,288 million yen, and net income of 5,287 million yen.

Furthermore, through application of Article 67, Provision 15(1) of the Act on Special Measures Concerning Taxation (Act No. 26 of 1957, including subsequent amendments), LLR intends to include distributions as deductible expenses and distribute the entire amount of unappropriated retained earnings (excluding fractional distribution amounts of less than one yen per investment unit). As a result, the distribution amount per investment unit is 2,962 yen.

In addition to this, in accordance with the distribution policy provided for in LLR's Articles of Incorporation, in principle LLR makes ongoing distributions in excess of retained earnings each fiscal period ("Ongoing Distributions in Excess of Retained Earnings") (Note 1). Furthermore, in addition to Ongoing Distributions in Excess of Retained Earnings, LLR may make distributions, of an amount that it determines, as a distribution of the amount of temporary excess profit, but only for the purpose of equalizing the amount of distributions per unit (Note 2) in the event there are one-time reductions up to a certain amount of distributions per unit as a result of: (i) financing activities such as the issuance of new investment units, the issuance of short-term corporate bonds, or borrowings; (ii) large-scale repairs resulting from earthquakes and other natural disasters or fires and other accidents; (iii) payments for the settlement of lawsuits; (iv) losses on sales of real estate; or (v) other reasons.

In the current fiscal period, LLR distributed 412 million yen as an Ongoing Distribution in Excess of Retained Earnings, an amount equivalent to approximately 30% of the 1,375 million yen that was the amount resulting from deducting the total amount of the accumulated depreciation recorded as of the last day of the previous fiscal period from the total amount of accumulated depreciation for the current fiscal period. As a result, the distribution in excess of retained earnings per unit in the current fiscal period was 231 yen (Note 3).

Note 1. LLR's policy is to make distributions in excess of retained earnings each fiscal period after careful consideration is given to alternative uses of cash, such as execution of repairs, capital expenditures, profit generated during the fiscal period, the amount available for distribution, repayment of debts, along with factoring in the prevailing economic environment, the real estate market, the competitiveness of its acquired assets as well as its overall financial condition.

Note 2. The amount of distributions which are the sum of the regular distributions in excess of retained earnings and the additional distributions in excess of our retained earnings when additional distributions in excess of retained earnings are made are limited to 60% of the amount resulting from deducting the total amount of the accumulated depreciation recorded as of the last day of the previous fiscal period from the total amount of accumulated depreciation calculated as of the last day of the relevant calculation period.

Note 3. The engineering report for each property prepared by building condition surveyors' estimates that the amount of anticipated semi-annual average of emergency or short-term repair and maintenance expenses and medium- to long- term repair and maintenance expenses is 282 million yen. LLR determines to make distributions in excess of retained earnings, considering that the amount of distributions in excess of retained earnings maintain the value of its portfolio and its financial stability taking into account macroeconomic environment, trends in the real estate market and real estate leasing industry and its financial conditions. Please note that the amount of distributions in excess of retained earnings will be deducted from the balance of LLR's unit holders' equity upon payment.

(Outlook for the Future)

1. Investment Environment Going Forward

In the next fiscal year, the main scenario will be the relaxation of restrictions on economic activities (based on the premise of progress of vaccinations) and the gradual transition to a post-COVID-19 economy centered on developed countries and a sustained economic recovery. In the global economic outlook for 2022, while service consumption, which had been affected by activity restrictions, is expected to head toward recovery, demand for capital goods, which has benefited from stay-at- home measures, is expected to peak. The inflation rate, which had remained high until now due to the tight supply and

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